JOHANNESBURG – Nigerian stocks surged by the most in more than five years Tuesday, extending their rally to a 12th day, as meager local interest rates sent traders on a hunt for yields.
The Nigerian Stock Exchange All Share Index climbed as much as 4.4% in Lagos, the sharpest gain since April 2015. The benchmark has climbed 12% in the past month, more than any of the other 93 major global gauges tracked by Bloomberg. It’s on the longest winning run since July 2017.
Local investors have flocked to the stock market in search for returns as yields on government debt dropped after a surprise September rate cut aimed at stimulating the economy in Africa’s largest oil producer. Traders are homing in on Nigerian companies they expect will best overcome the onslaught of Covid-19 and be able to distribute dividends to shareholders.
“The low yield environment has directed some local institutional investors’ participation in the market, further aided by the relatively good corporate results and attractive valuations from some companies,” Lilian Olubi, chief executive officer of EFG Hermes Nigeria, said by email.
Market giant Dangote Cement Plc, which climbed 9.9%, MTN Nigerian Communications Plc, up 3.7%, and Nestle Nigeria Plc, which gained the maximum-allowed 10%, were the three biggest contributors to Tuesday’s advance, the most of all major gauges globally.